Cato: ObamaCare price tag is $6 trillion

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Cato: ObamaCare price tag is $6 trillion

posted at 1:25 pm on November 28, 2009 by Ed Morrissey


The advocates of ObamaCare argue that the overhaul of the American health-care system will cost “only” a trillion dollars in its first decade. Michael Cannon at the libertarian think tank Cato says that Congress relies on significant budgetary gimmicks to get to that number, and that the true cost of ObamaCare in its first real decade is six times that amount:

One gimmick makes the new entitlement spending appear smaller by not opening the spigot until late in the official 10-year budget window (2010–2019). Correcting for that gimmick in the Senate version, Sen. Judd Gregg (R-NH) estimates, “When all this new spending occurs” — i.e., from 2014 through 2023 — “this bill will cost $2.5 trillion over that ten-year period.”

Another gimmick pushes much of the legislation’s costs off the federal budget and onto the private sector by requiring individuals and employers to purchase health insurance. When the bills force somebody to pay $10,000 to the government, the Congressional Budget Office treats that as a tax. When the government then hands that $10,000 to private insurers, the CBO counts that as government spending. But when the bills achieve the exact same outcome by forcing somebody to pay $10,000 directly to a private insurance company, it appears nowhere in the official CBO cost estimates — neither as federal revenues nor federal spending. That’s a sharp departure from how the CBO treated similar mandates in the Clinton health plan. And it hides maybe 60 percent of the legislation’s total costs. When I correct for that gimmick, it brings total costs to roughly $2.5 trillion (i.e., $1 trillion/0.4). …

When we correct for both gimmicks, counting both on- and off-budget costs over the first 10 years of implementation, the total cost of ObamaCare reaches — I’m so sorry about this — $6.25 trillion. That’s not a precise estimate. It’s just far closer to the truth than President Obama and congressional Democrats want the debate to be.

Consider these unfunded mandates. The states will have plenty of those under ObamaCare, with the expansion of Medicaid eligibility. Cannon is right about the unfunded mandates on employers and individuals being part of the cost of the program. Thus far, no one has really pointed out that costs in this plan are not limited to federal expenditures, but also to the extra costs everyone will pay — for a reform that purports to “bend the cost curve” downward.

Perhaps Senator Gregg can ask the CBO to study that question further in its next analysis.